Millions of pounds have been invested by the public in community energy solar projects following the government’s decision to remove such projects from Enterprise Investment Scheme (EIS) tax relief.

A record £7.821 million was raised by 15 community benefit societies (bencoms) for use on solar projects across the UK, with four funds securing investments of over £1 million for their share offers. The Meadow Blue Community Energy bencom in West Sussex topped the list with a final investment of over £1.247 million, closely followed by Bath and West Community Energy which attracted £1.243 million.

The release of the bencoms figures follows the unexpected announcement at the end of October by the Treasury to remove community energy from a number of tax reliefs, including EIS, as part of the government’s amendments to its latest Finance Bill. EIS is designed to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies. The decision to remove these projects from eligibility was taken after the Treasury claimed individuals or companies were using the schemes as a vehicle for tax avoidance, but has been branded “disappointing and damaging” by industry.

Despite the government’s repeated decisions to act against renewable energy, the high level of investment represented by the 15 projects suggests there is still wide-ranging support for clean community energy production.

Funds run in association with Mongoose Energy made up 61% of all those raised for solar community energy projects, with its five funds worth £4.8 million all in the top six projects.   

Jan Willem Bode of Mongoose Energy, which worked with Meadow Blue and Bath and West projects, said: “This exceptional rate of investment in community renewable projects shows there is wide-scale support for community energy to be a significant player in the industry in the UK. With it happening within a week of the announced plan to shut coal-fired stations, I think we will look back at this moment and realise this is the beginning of truly locally owned, low carbon power.”

Bode continued: “While the removal of EIS is an odd blow for George Osborne to land on the same day as the UN Climate Change Conference, it has helped to raise awareness and interest in these opportunities and these investment figures shows that people want to invest in ethical, local energy sources.”

Chris Rowland, chair of Meadow Blue Community Energy, told Solar Power Portal that he believed local support for community energy projects would continue in spite of changes to government policy.

He said: “I think public support will continue, I think there’s a real appetite for this kind of thing.  It’s just a matter of finding the point at which people are willing to invest and take some kind of risk. In a way the EIS and seed investment tax relief [SEIS, which community projects are no longer eligible for] was there because you were taking a risk and community energy projects do have a certain risk attached to them.”

Rowland added his belief that the cuts to other forms of funding, such as those planned for the feed-in tariff, are adding greater uncertainty to these projects.

“I don’t think it’s dead, I think it will continue and we are just waiting for what the government may announce on the feed-in tariff in the short term but in the longer term those incentives won’t be there so we have to find a way for community energy to survive without them,

“An interesting area for community energy in the future is how it can address the balance between what goes in to the grid and what’s consumed on site, so storage and management of the supply of energy on site is a really interesting area for community energy to look at.

“The other area would be the ability to sell direct to customers. I know that community energy groups across the UK are interested in that; to work with a utility company or become a local utility company to sell electricity or heat directly to customers,” Rowland said.